Weighing the Options of Refinancing

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It has been said that only in the case your new interest will be at least 2 points lower, should you refinance your mortgage. Maybe that was sound advice several years ago, but as refinance costs have been getting lower, it could be a good time to take a serious look. A refinanced loan is often worth its cost several times over, factoring in the advantages that it brings, in addition to a lower interest rate.

Benefits from Refinancing

You might be able to lower your interest rate (sometimes significantly) and reduce your monthly payment amount with a refinanced mortgage loan. You may also have the ability to "cash out" some of your home equity, which you may use to consolidate debt, add on to your home, or finance a vacation. You may be able to refinance into a shorter-term mortgage loan, giving you the ability to build your equity quicker.

Fees and Expenses

All these benefits do come with some expense, though. You'll have to pay the same sort of expenses and fees as you did with your present mortgage loan. These could include settlement costs, an appraisal, lender's title insurance, underwriting fees, and so on.

Do the Math

Paying points can help you attain a better interest rate. When you pay (on average) 3% of the loan amount at the start, your savings for the term of the refinanced mortgage loan can be substantial. We recommend that you talk to a tax professional before acting on rumors that the paid points may be deducted on your federal income taxes.

One more expense that a borrower might take into account is that a reduced rate of interest will lower the interest amount you will deduct on your federal income taxes. Call us at 562 320-0510 to help you do the math.

Most borrowers find that the savings each month outweigh the up-front cost of a refinance. We can help you explore what your options are, considering the effect a refinance may have on your taxes, whether you are likely to sell your home in the next couple of years, and your available cash. Call us at 562 320-0510 to get you started.

Want to know more about refinancing your home? Call us: 562 320-0510.

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